Controlled Recognized Environmental Condition (CREC) is a proposed new term for the ASTM E1527 standard for Phase I Environmental Site Assessments (ESAs). The Controlled REC concept was introduced to address contaminated sites that have received risk-based regulatory closure, where no further remediation is required but residual contamination still exists at a site and the property is subject to activity and use limitations or “AULs.” These sites, where contamination is controlled but could still pose ongoing or future obligations on the owner (such as special precautions during construction or grading activities), have been a source of some confusion to the environmental due diligence industry with regards to how they should be classified. The Controlled Recognized Environmental Condition or “CREC”, if accepted, would be a distinct classification from Historical Recognized Environmental Condition (HREC) and Recognized Environmental Condition (REC). The environmental professional would be required to list any CRECs identified in the findings and conclusions section of the Phase I Environmental Site Assessment report.
A Recognized Environmental Condition (REC) is defined by ASTM as “the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, ground water, or surface water of the property. The term includes hazardous substances or petroleum products even under conditions in compliance with laws.” The term REC does not include de minimis conditions.
A Historical Recognized Environmental Condition is defined by ASTM as “an environmental condition which in the past would have been considered a recognized environmental condition, but which may or may not be considered a recognized environmental condition currently.” The determination of whether an environmental condition is a recognized environmental condition (REC) or a historical recognized environmental condition (HREC) lies with the environmental professional, and depends upon how the condition impacts the current or future use of the property. A release that was remediated and given regulatory closure may be considered an HREC unless it is determined to have a significant current or future impact on the property, at which point the environmental professional may deem it a REC.
An Environmental Professional is someone qualified to conduct and/or supervise a Phase I Environmental Site Assessment, based on experience and education requirements. An Environmental Professional or “EP” must possess sufficient knowledge and experience to exercise professional judgment, appropriately evaluate risks and form conclusions regarding conditions indicative of releases or threatened releases at a property. The requirements for an Environmental Professional include:
A federal, state or tribal issued certification or license (Professional Geologist, Professional Engineer or other certification to perform environmental inquiries) and 3 years of relevant full-time experience;
A Baccalaureate degree or higher in science or engineering and 5 years of relevant full-time work experience;
10 years of relevant full-time work experience.
De minimis conditions are defined by ASTM as environmental conditions that “generally do not present a threat to human health or the environment and that generally would not be the subject of an enforcement action if brought to the attention of appropriate governmental agencies.” A de minimis condition is not considered a recognized environmental condition. An example of a de minimis condition might be a small, superficial spill of oil that is not anticipated to cause a significant concern.
Business Environmental Risk is characterized by the American Society for Testing and Materials (ASTM) as “a risk which can have a material environmental or environmentally-driven impact on the business associated with the current or planned use of a parcel of commercial real estate, not necessarily limited to those environmental issues required to be investigated in this practice (ESA, ASTM E1527-05). Consideration of business environmental risk issues may involve addressing one or more non-scope considerations.”
The conventional non-scope environmental business risk items alluded to include:
- Lead Paint
- Lead in Drinking Water
- Ecological resources
- Endangered Species
- Cultural and historic resources
- Regulatory compliance
- Industrial Hygiene
- Health and Safety
- Indoor air quality
- Biological agents
Business Environmental Risk is by definition very broad and can encompass many types of risk, not limited to the above list.
The Environmental Site Assessment is a process of evaluating the environmental liability of a real estate asset. Specifically, Environmental Site Assessment or “ESA” is the process of conducting “all appropriate inquiry” into the past or present uses of a property to determine whether the property is impacted by a “recognized environmental condition” (REC). The ESA process includes a site inspection, a review of historical records of the property and research of records available at government agencies. This information is detailed and evaluated in the Phase I Environmental Site Assessment Report, and an opinion is made as to whether past or present activities may have caused a release of hazardous substances or petroleum products at the property. The ESA is the primary tool used to qualify a user for the Landowner Liability Protections under CERCLA. Learn more about ESAs here.